Condo Deconversion in Illinois
The sale of an entire condominium property to a single buyer: approved by the owners, executed under Section 15 of the Illinois Condominium Property Act, and closed in one transaction instead of dozens.
Investor demand for well-located rental housing continues to outrun supply, and rising construction costs make existing buildings attractive relative to ground-up development. For many associations, especially buildings carrying deferred maintenance, rising assessments, or a high rental share, the property is worth more as one rental asset than as the sum of its units.
A deconversion turns that gap into proceeds for every owner. It is a board-led, owner-approved process with defined statutory steps, not an offer that arrives in the mail. BV advises associations through all of it: valuation, owner education, the vote, and the transaction.
Four phases, board-led throughout
Evaluation
- Professional valuation of the property as a multifamily rental asset
- Analysis of the premium potential over individual unit sales
- Initial presentation to the board
Education
- Owner forums to address questions directly
- Clear documentation for owners and the board
- Preparation for the association vote
Marketing
- Presentation to pre-qualified investors
- Strategic property tours
- Competitive bidding process
Vote & transaction
- Association vote on the selected offer
- Buyer due diligence, documentation, and closing
- Payment distribution, with leaseback options
The threshold your declaration sets
Approval requirements are set by each association's declaration and bylaws, within the statutory framework, and the City of Chicago adds its own ordinance on top. Where your building falls is one of the first things to establish.
Declarations commonly require 75%, with the full range running 66.67% to 100%.
Chicago ordinance requires 85% owner approval to sell the entire property to a single entity in buildings of seven or more units.
Thresholds are a matter of your declaration, the Illinois Condominium Property Act, and municipal ordinance. Confirm your building's requirement with a deconversion attorney before relying on any figure here.
What owners and boards ask
The questions below come up at nearly every owner forum. Bring the rest to us; owner education is a formal phase of the process, not an afterthought.
How is the purchase price of my unit calculated?
Your value is based on the unit ownership percentages spelled out in the association declaration. If needed, the unit purchase price can instead be calculated based on unit type and/or unit square footage.
How many votes are required from the owners to approve a sale?
The percentage varies by association; review your declaration and bylaws. Typically 75% is required, though requirements range from 66.67% to 100%. In Chicago, 85% of unit owners must approve selling the entire condominium property to a single entity in buildings with 7 or more units.
Will the buyer buy units in bulk (less than 100% of the units)?
Typically, no. Developers don’t approach individual owners with unit-specific offers; they make an offer on the property as a whole. In the majority of cases, deconversions are bulk sales that happen in one transaction.
How does the board move forward with a listing agreement?
Listing agreements are approved by a majority of the board at an open board meeting. We recommend the association consult a deconversion attorney regarding its specific requirements.
What happens to our reserves?
In nearly every case, the sale can be negotiated so that owners keep the association reserves. Those reserves are disbursed to owners after the association winds down, typically 60 to 90 days after the closing date.
Will renovations or capital expenditures be required before the sale?
No. Buyer offers are based on the as-is condition of the property, and the buyer is responsible for any deferred maintenance after the closing date.
What happens to my tenant's lease?
The tenant's lease survives the sale. A change in ownership doesn't cancel or modify an existing lease — the new owner steps into the landlord role and is bound by the same terms your tenant already agreed to: same rent, same end date, same conditions.
How long does a deconversion take?
Section 15 sales generally average 8 to 12 months from listing to close, with clear milestones along the way: marketing, buyer tours, buyer selection, the owner vote, buyer due diligence, and closing paperwork.
Do owners get compensated for recent improvements?
In most cases, buyers allocate a percentage of the purchase price to upgraded-unit credits. If a unit qualifies, the credit is paid in addition to the baseline purchase price for that unit.
How do association loans or special assessments get paid?
The association loan is paid off from the sale proceeds. Owners pay off their special assessment balances to the association at closing. After the association winds down, 60 to 90 days after closing, any money remaining in the association account is disbursed to owners based on their unit ownership percentages.
Do we all have to move?
No. Buyers are generally willing to lease units back to owners on short- or longer-term leases. Each owner chooses at closing whether to lease back or move out. Typical terms run up to a year at a rate at or below what the unit would otherwise rent for, and special situations are typically accommodated.
Why associations say yes
Financial
- Premium pricing over individual unit sales
- Lower transaction costs: one sale, not dozens
- No renovation expense: the property sells as-is
- Association reserves typically stay with owners
- Upgrade credits for recent unit improvements
Flexibility
- Stay in place: lease back your unit at or below market
- Existing tenant leases honored and transferred
- A path out of negative equity for underwater owners
- Clean exit: no future special assessments
- Special situations accommodated
Process
- Professional handling of every transaction detail
- No individual marketing, showings, or negotiations
- Collective leverage individual sellers don’t have
- A standard timeline with clear milestones
- Board-led decisions through established governance
Start with the valuation.
A professional valuation of the building as a rental asset, before any vote and at no obligation. If the premium isn't there, we'll tell you.
1 Ranges reflect the experience of BV's advisory team across closed Chicagoland deconversions, including transactions completed at prior firms. Outcomes depend on the property, the market, and the terms of each sale; past results do not guarantee future performance. 2 Approval thresholds are set by each association's declaration and bylaws, the Illinois Condominium Property Act, and, in Chicago, municipal ordinance. Nothing on this page is legal or tax advice; associations should engage a deconversion attorney and their own tax advisors.